582 F.

2d 248

Arlene M. MATTERN, Appellant,

v.
F. David MATHEWS, Secretary of Health, Education and
Welfare, Appellee.
No. 77-1629.

United States Court of Appeals,

Third Circuit.
Argued Feb. 17, 1978.
Decided June 30, 1978.

Alan Linder, Central Pennsylvania Legal Services, Lancaster, Pa., for

appellant.
David W. Marston, U. S. Atty., Philadelphia, Pa., William Kanter, Robert
S. Greenspan, U. S. Dept. of Justice, Washington, D. C., Steven L. Jones,
Dept. of Health, Education, and Welfare, Baltimore, Md., for appellee.
Before GIBBONS and HUNTER, Circuit Judges and STAPLETON,
District Judge.*
OPINION
JAMES HUNTER, III, Circuit Judge.

In this appeal we again examine the constitutionality of the procedures

established by the Secretary of Health, Education and Welfare for recoupment
of alleged overpayments under section 204 of the Social Security Act.1 When
this case was first presented to the district court, the administrative procedures
were found to violate due process since they permitted an adjustment or
reduction of social security payments without affording the beneficiary the
right to a prior oral hearing. Mattern v. Weinberger, 377 F.Supp. 906
(E.D.Pa.1974). On review, we affirmed that decision with certain
modifications. Mattern v. Weinberger, 519 F.2d 150 (3d Cir. 1975). The
Supreme Court granted the Secretary's petition for certiorari, and vacated and
remanded the case for reconsideration in light of its decision in Mathews v.

Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Mathews v.

Mattern, 425 U.S. 987, 96 S.Ct. 2196, 48 L.Ed.2d 812 (1976). We remanded
the case to the district court, which reversed its earlier ruling and held the
existing procedures satisfied the requirements of due process. Mattern v.
Mathews, 427 F.Supp. 1318 (E.D.Pa.1977). We reverse, since we do not
believe that Eldridge and subsequent cases substantially alter the result in our
original decision.
I. THE STATUTORY BACKGROUND AND REGULATIONS
2

Section 204 of the Social Security Act permits the Secretary to recover
overpayments of benefits paid under Title II of the Act, 42 U.S.C. 401 Et
seq., by withholding a portion of future benefits until the amount of the
overpayment is recouped. Id. 404(a). The right of recovery, however, is
limited by section 204(b), Id. 404(b). That section provides that there may be
no recoupment when the overpaid beneficiary is "without fault"2 and the
recoupment either would "defeat the purpose" of Title II of the Act3 or would
be "against equity and good conscience."4

The Secretary's regulations provide the procedure for recovery of overpayments

made to recipients of old-age or disability benefits. First, an initial
determination is made that an overpayment has occurred and that section
204(b) provides no basis for a "waiver" of recoupment (20 C.F.R. 404.905).
All recipients subject to recoupment are then sent letters which set forth the
reasons for the proposed recoupment, the availability of reconsideration of the
determination of overpayment, the conditions for "waiver" under section
204(b), and the need to consult with a local Administration office within thirty
days if the recipient feels that circumstances would justify reconsideration or
"waiver" (Social Security Claims Manual 5503; 20 C.F.R. 404.907). Full
benefits are paid during the thirty day period (Claims Manual 5503.3).

Once a request for reconsideration or "waiver" and supporting documents have

been filed, the Secretary may further delay recoupment until the case has been
reconsidered (Claims Manual 5503.3, 5503.5). If the Secretary adheres to
his initial determination after the reconsideration (20 C.F.R. 404.914), the
claimant is so notified and benefits begin to be withheld. Only at that time, after
benefits have been reduced, does the claimant have the right to an evidentiary
De novo hearing (20 C.F.R. 404.917). At the hearing, the beneficiary has the
right to introduce oral testimony and to cross-examine witnesses. (20 C.F.R.
404.917-404.934). A request for a hearing does not delay recoupment. While
the record in this case is not clear, it appears that a delay of several months
usually occurs between the time benefits are withheld and the first opportunity

for a hearing. The hearing is first reviewable by the Appeals Council of the
Social Security Administration (20 C.F.R. 404.945) and then by a federal
district court under section 205(g) of the Act, 42 U.S.C. 405(g).
II. FACTS
5

The facts giving rise to this case are fully described in our original opinion, 519
F.2d at 154-55. Briefly, the named plaintiff in this suit, Arlene Mattern, applied
in 1971 for disabled widow's benefits under 42 U.S.C. 402(e) (1)(B)(ii),
based on the social security earnings of her husband. Her application was
approved and benefits were scheduled to begin in December 1971, after the
statutory waiting period of six months.5

In January and February of 1972, plaintiff received two checks. She received
her first regular benefits check in the amount of $119.30. Next, she received a
special check for $1063.80 for benefits covering the period May to December,
1971. The latter check was erroneously issued.

The Social Security Administration contends that plaintiff was told to return the
special check in a letter dated January 28, 1972 and in a telephone conversation
on that day. District office records also show that the plaintiff's sister was told
that plaintiff should return the special check. Plaintiff counters that the letter
was ambiguous and was not understood to request the return of the $1063.80
check, and that she never received the phone calls. The check was never
returned.

On July 14, 1972, plaintiff was sent a letter advising her that she had received
$1063.80 more than she was entitled to and that an adjustment would be made
in her forthcoming benefit payments. On August 7, 1972, plaintiff requested the
Secretary to "waive" recoupment of the overpayment. "Refund" and "without
fault" questionnaires were filed to support the request. Plaintiff listed her
monthly expenses and stated that she had no other source of income, that she
had been ill, that she had spent the proceeds of the check on her bills, and that
she had never received any letter or phone call advising her that the $1063.80
check had been sent in error. The district office made an initial determination
that Mrs. Mattern was not "without fault" and so denied the request for
"waiver." The office relied on both the January 28 letter and office records of
the phone calls. Plaintiff then filed a request for reconsideration, which was
denied on January 3, 1973. The office determined that plaintiff's benefits
amount would be reduced by $30 per month until the full amount of the
overpayment was recovered.

Prior to the reconsideration, plaintiff filed this class action in the District Court
for the Eastern District of Pennsylvania, seeking injunctive relief for her claim
that the procedures followed by the Secretary violated due process by failing to
provide for a hearing before the reduction of benefits. The district court
originally held that the due process clause required a hearing prior to the
adjustment of social security benefits. Mattern v. Weinberger, 377 F.Supp. 906
(E.D.Pa.1974). Appeals by the Secretary eventually resulted in the district court
reconsidering its decision in light of Mathews v. Eldridge, supra. In this second
decision, the district court found jurisdiction under either 28 U.S.C. 1361 or
42 U.S.C. 405(g), or both, and held that due process does not require a
hearing before recoupment commences by the withholding of benefits.
Accordingly, the court granted a motion by the Secretary for summary
judgment. The court also denied plaintiff's renewed motion for class
certification. Mattern v. Mathews, 427 F.Supp. 1318 (E.D.Pa.1977). Plaintiff
filed a timely notice of appeal.

III. JURISDICTION
10

The Secretary argues that we are without jurisdiction to decide this case at this
time. In our first opinion in this case, we found jurisdiction under the
Mandamus Act.6 519 F.2d at 155-57. In its reconsideration of the case, the
district court found that Eldridge had lowered the jurisdictional barriers to
review under section 205(g) of the Social Security Act,7 thus casting doubt on
the propriety of the extraordinary mandamus jurisdiction. It therefore assumed
jurisdiction at least under section 205(g).

11

The Secretary argues that section 205(h) of the Act prohibits the exercise of
mandamus jurisdiction by this court.8 He interprets recent Supreme Court cases
as indicating that section 205(g) is the exclusive avenue of judicial review of
decisions and procedures of the Secretary. Califano v. Sanders, 430 U.S. 99,
109, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977); Weinberger v. Salfi, 422 U.S. 749,
764, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). See also Norton v. Mathews, 427
U.S. 524, 96 S.Ct. 2771, 49 L.Ed.2d 672 (1976). The Secretary then concludes
that plaintiff's case is not ripe for review under section 205(g).

12

At the outset, we would note that it is far from clear that section 205(h) bars
mandamus jurisdiction in this case. Several other courts, after considering the
Supreme Court cases cited by the Secretary, have found jurisdiction under
section 1361 in cases involving Social Security procedures. See, e. g., Elliott v.
Weinberger, 564 F.2d 1219, 1225-28 (9th Cir. 1977), Petition for cert. filed, 46
U.S.L.W. 3680 (U.S. April 21, 1978); White v. Mathews, 559 F.2d 852, 855-56
(2d Cir. 1977), Cert. denied, 435 U.S. 908, 98 S.Ct. 1458, 55 L.Ed.2d 500

(1978); Caswell v. Califano, 435 F.Supp. 127, 131-33 (D.Me.1977). Like the
district court below, however, we do not need to reach the question of
mandamus jurisdiction.
13

We hold that we have jurisdiction over this case under section 205(g), as
interpreted by our recent decision in Liberty Alliance of the Blind v. Califano,
568 F.2d 333 (3d Cir. 1977). Before we may take jurisdiction under this
section, plaintiff must satisfy two conditions. First, a claim for benefits must
have been presented to the Secretary. Second, there must have been a final
decision after a hearing. 42 U.S.C. 405(g); See Mathews v. Diaz, 426 U.S. 67,
75-77, 96 S.Ct. 1883, 48 L.Ed.2d 478 (1976); Mathews v. Eldridge, supra, 424
U.S. at 328-29, 96 S.Ct. 893; Liberty Alliance of the Blind v. Califano, supra,
568 F.2d at 344.

14

The first requirement was met by the plaintiff. The second requirement, which
is essentially an exhaustion requirement, was not met, but is waivable either by
the Secretary, Mathews v. Diaz, supra, 426 U.S. at 76-77, 96 S.Ct. 1883, or by
the court on its own determination, Mathews v. Eldridge, supra, 424 U.S. at
330-32, 96 S.Ct. 893. Liberty Alliance of the Blind v. Califano, supra, 568 F.2d
at 344; See Weinberger v. Salfi, supra, 422 U.S. at 765-67, 95 S.Ct. 2457. In
Eldridge the Court discussed two factors in reaching its conclusion that further
exhaustion should not be required. First, the claim presented in that case, the
right to a hearing before disability benefits are terminated, was said to be
collateral to the substantive claim of entitlement to benefits. 424 U.S. at 330, 96
S.Ct. 893. We hold, and the Secretary concedes, that Mrs. Mattern's assertion of
the right to a prior hearing is collateral to her claim for benefits. Second, the
Supreme Court found that plaintiff had raised "at least a colorable claim . . . an
erroneous termination (of disability benefits) would damage him in a way not
recompensable through retroactive payments." 424 U.S. at 331, 96 S.Ct. at 901
(footnote omitted). We find that the plaintiff in this case, in light of the
financial hardship she alleges as a basis for "waiver" of recoupment, has made a
colorable showing of irreparable harm from the interim reduction of benefits.
We therefore find that this is a case where the claimant's interest in having the
constitutional issue resolved promptly is so great that further deference to
agency procedures is inappropriate. Mathews v. Eldridge, supra, 424 U.S. at
330, 96 S.Ct. 893; See Liberty Alliance of the Blind v. Califano, supra, 568
F.2d at 345-46; De Lao v. Califano, 560 F.2d 1384, 1388 (9th Cir. 1977);
Johnson v. Mathews, 539 F.2d 1111, 1116-17 (8th Cir. 1976).9 IV. DUE
PROCESS

15

The Secretary does not dispute that plaintiff's interest in social security benefits
is a property right for purposes of the fifth amendment's due process clause.

The Supreme Court in Eldridge considered this issue settled. 424 U.S. at 332,
96 S.Ct. 893. The question presented in this case is what process must be
afforded a claimant before benefits are reduced in order to recoup an alleged
overpayment. Basically, plaintiff contends that due process requires that a
recipient of benefits have a right to an oral hearing prior to the reduction of
benefits, instead of afterwards as is now provided by the Secretary's regulations
and practice.
16

The Supreme Court, in remanding this case to us, directed that we consider the
matter in light of Eldridge. In that case, the Court set out a three-part balancing
test for determining the specific process which is constitutionally required:

17 precisely, our prior decisions indicate that identification of the specific

More
dictates of due process generally requires consideration of three distinct factors: first,
the private interest that will be affected by the official action; second, the risk of an
erroneous deprivation of such interest through the procedures used, and the probable
value, if any, of additional or substitute procedural safeguards; and finally, the
Government's interest, including the function involved and the fiscal and
administrative burdens that the additional or substitute procedural requirement
would entail. See, E. g., Goldberg v. Kelly, (397 U.S. 254) (90 S.Ct. 1011, at 10181022, 25 L.Ed.2d 287) 263-271 (1970).
18

424 U.S. at 334-35, 96 S.Ct. at 903.

A. The Private Interest

19

One of the three factors involved in the balancing test in Eldridge is the
plaintiff's interest which will be affected by the Secretary's action. The Court in
Eldridge was dealing with the decision of the Secretary to terminate disability
benefits. The Court in large part compared this interest to the "brutal need" of
the welfare recipient in continued benefits, which formed the basis of the
Court's decision in Goldberg v. Kelly, 397 U.S. 254, 263-64, 90 S.Ct. 1011, 25
L.Ed.2d 287 (1970), that a hearing is required prior to a termination of benefits.
While the plaintiff's interest in Eldridge was found to be substantial, it was not
considered to be as strong as that presented to the Court in Goldberg. First,
unlike welfare payments, disability benefits under 42 U.S.C. 423 are not
need-based. Further, even if disability benefits are erroneously terminated, the
claimant could turn to welfare payments. The Eldridge court, nevertheless, did
not find this difference to be determinative of the question whether a prior
hearing was needed, and emphasized that "the degree of difference (between
the interest of the welfare and disability benefits recipients) can be overstated."
424 U.S. at 341, 96 S.Ct. at 906.

20

The district court found that plaintiff's interest not to have benefits temporarily
reduced was weaker than the interest in Eldridge not to have benefits
temporarily terminated. We disagree with this analysis. Unlike the disability
benefits under 42 U.S.C. 423 considered in Eldridge, the benefits involved in
this case are in part need-based and are subject to reduction when the recipient
receives income from a number of other sources. See 42 U.S.C. 403; Elliott v.
Weinberger, supra, 564 F.2d at 1231. Further, when a recipient has claimed a
"waiver" of recoupment, he is claiming that recoupment would defeat the
purpose of the Act or would be against equity and good conscience. 42 U.S.C.
404(b). The Secretary's regulations interpret the statutory prohibition of
recoupment in terms of financial hardship to the recipient. See notes 2-4 Supra.
Therefore, when a waiver is erroneously denied by the Secretary prior to a
hearing, the recipient faces a particularly severe impact.10

21

Even though the recipient subject to recoupment is faced only with a reduction
of benefits, his need for full benefits, particularly if he qualifies for a "waiver,"
may often be greater than the need of the disability benefits recipient.
Nevertheless, we do not believe that the plaintiff's interests here are as strong as
those involved in Goldberg. The victims of erroneous recoupment, like the
claimant in Eldridge, generally have resort to welfare and other benefits. We
conclude that the private interest, particularly in the "waiver" cases, falls
between that considered in Eldridge and that in Goldberg. See Elliott v.
Weinberger, supra, 564 F.2d at 1231; Cf. Tatum v. Mathews, 541 F.2d 161,
165 (6th Cir. 1976) (Supplemental Security Income program, 42 U.S.C.
1381 Et seq.); Johnson v. Mathews, supra, 539 F.2d at 1121-22 (same).

B. Utility of Prior Hearing

22

The second factor to be considered under Eldridge is the "fairness and

reliability of the existing . . . procedures, and the probable value, if any, of
additional procedural safeguards." 424 U.S. at 343, 96 S.Ct. at 907. In that case
the Court was faced with the termination of disability benefits, which under the
statute and regulations would require a "medical assessment of the worker's
physical or mental condition." Id. The Court found:

23 is a more sharply focused and easily documented decision than the typical
This
determination of welfare entitlement. In the latter case, a wide variety of information
may be deemed relevant, and issues of witness credibility and veracity often are
critical to the decisionmaking process. Goldberg noted that in such circumstances
'written submissions are a wholly unsatisfactory basis for decision.' 397 U.S., at 269
(90 S.Ct., at 1021.
By contrast, the decision whether to discontinue disability benefits will turn, in most
24

cases, upon 'routine, standard, and unbiased medical reports by physician

specialists', Richardson v. Perales, 402 U.S. (389) 404 (91 S.Ct. 1420, at 1428, 28
L.Ed.2d 842 (1971)), concerning a subject whom they have personally examined. . .
. The potential value of an evidentiary hearing, or even oral presentation to the
decisionmaker, is substantially less in this context than in Goldberg.
25

424 U.S. at 343-45, 96 S.Ct. at 907. The court noted that the claimant's access
to information in files and the opportunity to submit further information after
an initial decision lessened the risk of an erroneous determination. The court
also looked to the low percentage of all disability terminations which are
reversed after administrative appeal, but noted that "although we view such
information as relevant, it is certainly not controlling in this case." Id. at 347, 96
S.Ct. at 908.

26

In our first decision in this case we relied to a large extent on the utility of a
hearing as the determinant of what process should be due. In that opinion we
separately analyzed "reconsideration" and "waiver" cases, and found a prior
hearing generally not required in the former and generally required in the latter.

27

After a recipient of social security benefits receives a notice of an initial

determination of overpayment and recoupment, he may request reconsideration
of that decision. In our previous opinion, we agreed with the Secretary that "
'reconsideration' cases are generally well suited to resolution by documentary
proof." 519 F.2d at 165. The decision of whether in fact an overpayment was
made will usually turn on arithmetic calculations, such as whether the
administration correctly computed an earnings statement, or whether two
checks were received instead of one. We therefore concluded:

28 such circumstances, an examination of social security records and cancelled

In
checks would seem to be sufficient, and it is hard to see how an oral hearing would
be of much benefit to the claimant.
29

Id.

30

We distinguished "waiver" cases. While some of the issues involved in the

determination of whether the Secretary is barred from recoupment by section
204(b) are susceptible of documentary proof, a substantial number are not. A
"waiver" depends on fault, financial dependence, and detrimental reliance. Id.
at 166-67, Elliott v. Weinberger, supra, 564 F.2d at 1232. Particularly the
finding of fault and to a lesser extent the other two factors rest on a complex
analysis of facts and of credibility. We noted that when credibility

determinations were involved, the Supreme Court had indicated that written
submissions were insufficient for an accurate determination and that an oral
hearing would be needed. 519 F.2d at 164-67.
31

We believe that this analysis of the utility of a pre-recoupment hearing in

reconsideration and waiver cases is fully consistent with Eldridge. Both our
prior decision and the Supreme Court's analysis of due process focused on the
nature of the evidence likely to be needed for a decision by the Secretary. When
that evidence is well suited to evaluation in written form, there is little need for
a prior oral hearing. When the Secretary's determination of a claim rests, for
example, on credibility, an oral hearing is crucial to the truth-finding process
and thus is an important element in deciding what procedures the Constitution
requires. See Goldberg v. Kelly, supra, 397 U.S. at 268-69, 90 S.Ct. 1011;
Kennedy v. Robb, 547 F.2d 408, 414-15 (8th Cir. 1976), Cert. denied, 430 U.S.
913, 97 S.Ct. 1325, 51 L.Ed.2d 592 (1977). See generally Board of Curators v.
Horowitz, 435 U.S. 78, 84-91, & n. 4, 98 S.Ct. 948, 952-955, 55 L.Ed.2d 124
(1978); Stretten v. Wadsworth Veterans Hospital, 537 F.2d 361, 368-69 (9th
Cir. 1976). This distinction is the same as was drawn by the Eldridge Court to
contrast the need for a hearing prior to the termination of disability payments
with the pre-termination hearing held to be required in Goldberg. 11 Accord,
Elliott v. Weinberger, supra, 564 F.2d at 1231-34.C. Governmental Interest

32

The third part of the Eldridge balancing test is the government's interest,
including the governmental function involved and the fiscal and administrative
burdens that a pre-recoupment hearing would involve. In large part we believe
that the government interest involved in this case is similar to that analyzed in
Eldridge. We do find some distinctions between this case and Eldridge, which
indicate that our requiring a prior hearing would impinge less on the
administration of social security benefits.

33

The Eldridge Court did not have clear evidence of the administrative burden of
imposing a requirement of a hearing prior to the termination of disability
payments. The Court commented that "(n)o one can predict" the increased
demand for hearings if a hearing were required before termination instead of
afterwards. It then reasoned, "the fact that full benefits would continue until
after such hearings would assure the exhaustion in most cases of this attractive
option." 424 U.S. at 347, 96 S.Ct. at 909. Further, the Court faced widely
varying estimates of the probable additional costs of pre-termination hearings,
and so concluded that experience with constitutionalizing administrative
procedures suggested that the additional cost "would not be insubstantial." Id.

34

First, on the basis of materials submitted to this court, we have reason to

question whether the assumption in Eldridge about increased numbers of

requests for hearings should be applied to our analysis of a right to a prerecoupment hearing.12 Although we agree that it is impossible to predict
accurately the increased burden of providing hearings, we believe it likely that
this burden would be less than was assumed in the circumstances considered in
the Supreme Court's decision.
35

Second, we believe that the Secretary faces much less risk of loss of erroneous
payments to recipients than was present in Eldridge. In that case, the hearing
under discussion would determine whether the recipient was still eligible for
benefits, after the Secretary had made an initial determination of ineligibility. If
payments were made pending the hearing, the Secretary faced a substantial risk
of paying benefits to an ineligible recipient without hope of recovering those
funds. In contrast, the hearing we are considering is to determine whether the
Secretary will be permitted to recoup an overpayment by deducting the amount
from a continuing stream of benefits being paid to a concededly eligible
recipient. In the general case, a delay in beginning recoupment will not
jeopardize the Secretary's ability to recover from later payments. Thus, we
believe that the Secretary's interest in preserving public funds is far less than
was before the Supreme Court in Eldridge. See generally Goldberg v. Kelly,
supra, 397 U.S. at 265, 90 S.Ct. 1011.

D. Conclusion
36

In our prior consideration of this case, we looked primarily at the utility of a

pre-recoupment hearing. In light of the differences we found in the
determination of a reconsideration and a "waiver" case, we distinguished the
process which would be required in each. For reconsideration cases, where we
found that documentary evidence was often sufficient for an accurate
determination of whether an overpayment had been made, we concluded:

37
Consequently,
the Secretary's pre-recoupment procedures permitting written
evidence and providing for an examination of written documents, when coupled with
a right of a Post -recoupment oral hearing, satisfy due process.
38

519 F.2d at 165. We did, however, add a caveat to this holding. Because we
could not envision all of the sorts of inquiries which might be called
"reconsiderations" under the regulations, we insisted that pre-recoupment oral
hearing be provided when the Secretary's decision did not rest on documentary
evidence, but instead involved an evaluation of the claimant's credibility. Id. at
165-66.

39

For "waiver" cases, in which we believed that credibility determinations would

generally be crucial to the Secretary's decision, we held that the Secretary
would generally be required to give a pre-recoupment oral hearing. We did limit
the right to a prior hearing, however, to those cases in which such a requirement
would serve a useful function:

40
While
we believe that claimants in "waiver" cases have a constitutional right to a
pre-recoupment oral hearing, that right may not attach in all cases. Where a claimant
in a "waiver" case raises no disputed issue of fact, or where, accepting his version of
the facts as true, we could say as a matter of law that he was not entitled to retain the
overpayment, then again it is hard to see how a pre-recoupment hearing would be of
benefit. Thus, the constitutional requirement of a hearing may be limited to some
extent by principles analogous to summary judgment in civil litigation.
41

Id. at 167 (footnote omitted).

42

We find that our analysis of due process in our first consideration of this case is
substantially consistent with the three-factor balancing test set forth in Eldridge.
Accord Elliott v. Weinberger, supra.

43

We believe that the plaintiff's private interest in having a pre-recoupment

hearing, particularly in "waiver" cases, is somewhat greater than that which
was before the Supreme Court in Eldridge, and that the government's interest in
delaying the hearing is somewhat less. The most substantial difference between
the recoupment procedure and the termination of disability is the value of a
prior hearing to the fact-finding which the Secretary must perform. Generally,
reconsideration cases may adequately be determined on the basis of
documentary evidence, while generally we believe that a hearing is the only
adequate proceeding for determination of a "waiver" case.

44

We hold that when the claimant has filed only for reconsideration, the balance
of the three factors yields the same result as was reached in Eldridge that a
post-recoupment hearing will suffice. We adhere to our former opinion
regarding reconsideration cases except in one respect. In the prior opinion, we
said that if a reconsideration case should arise which rested on credibility
evidence, a hearing would be constitutionally required. We do not believe that
this qualification is consistent with Eldridge, which declares that procedural due
process is to be shaped according to "the risk of error inherent in the
truthfinding process as applied to the generality of cases, not the rare
exceptions." 424 U.S at 344, 96 S.Ct. at 907.

45

When the recipient claims a "waiver," i. e. that the Secretary is barred from
recouping an overpayment by section 204(b), we adhere fully to our prior
decision. Because of the similarity of the "waiver" inquiry to that considered by
the Supreme Court in Goldberg v. Kelly, supra, and in light of the analysis of
the Eldridge decision, we hold that the due process clause requires a prerecoupment oral hearing when a recipient has filed a legally sufficient claim of
entitlement to "waiver" of recoupment under section 204(b).

46

To the extent that a hearing is required, we do not believe that a full judicial or
quasi-judicial proceeding is necessary. A court must be flexible in fitting
procedural requirements to the circumstances of a case. Board of Curators v.
Horowitz, supra, 435 U.S. at 78, 98 S.Ct. 948; Cafeteria Workers v. McElroy,
367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961). After considering all
factors under the analysis in Eldridge, we find that an informal oral hearing will
provide adequate safeguards to recipients of Title II benefits who are subject to
recoupment. We adhere fully to the minimum standards for such a hearing
which we described in our earlier opinion:

47 therefore believe that due process requires only an informal, oral hearing which
We
provides the following safeguards:
48 an impartial decision maker separated from those making the previous
1)
administrative determinations in the case;
2) timely and adequate notice to the recipient of the reasons for recoupment;
49
50 an effective opportunity for the recipient to confront and cross-examine adverse
3)
witnesses;
51 an effective opportunity for the recipient to present his own argument and
4)
evidence orally;
52 an opportunity to retain counsel or have the informal assistance of a friend, if the
5)
recipient desires;
53 a report written by the decision maker which informally states the reasons and the
6)
evidence relied on in reaching his decision;
54 an opportunity for all parties to receive and challenge the decision maker's report
7)
before it becomes final.
55

519 F.2d at 168-69 (footnotes omitted). Accord Elliott v. Weinberger, supra,

564 F.2d at 1235; See Goldberg v. Kelly, supra, 397 U.S. at 267-71, 95 S.Ct.

1011.
V. CLASS ACTION
56

The district court denied plaintiff's motion for a class action. The only reason
indicated for its departure from its certification of the class in its first
consideration of the case, 377 F.Supp. at 915-916, was a citation to Weinberger
v. Salfi, supra. Apparently the court was concerned over the compatibility of a
class action with jurisdiction under section 205(g) of the Act, 42 U.S.C.
405(g).

57

In Liberty Alliance of the Blind v. Califano, supra, which was decided after the
trial judge's consideration of this case, we indicated that a class action could be
maintained under section 205(g). Since we will reverse and remand this case,
the district court should reconsider class certification in light of Liberty
Alliance. See also Johnson v. Mathews, supra; Caswell v. Califano, supra.

58

The judgment of the district court will be reversed and the case remanded for
further proceedings consistent with this opinion.

Honorable Walter K. Stapleton, United States District Judge for the District of
Delaware, sitting by designation

42 U.S.C. 404 (1970):

(a) Whenever the Secretary finds that more or less than the correct amount of
payment has been made to any person under this subchapter, proper adjustment
or recovery shall be made, under regulations prescribed by the Secretary, as
follows:
(1) With respect to payment to a person of more than the correct amount, the
Secretary shall decrease any payment under this subchapter to which such
overpaid person is entitled, or shall require such overpaid person or his estate to
refund the amount in excess of the correct amount, or shall decrease any
payment under this subchapter payable to his estate or to any other person on
the basis of the wages and self-employment income which were the basis of the
payment to such overpaid person, or shall apply any combination of the
foregoing. . . .
(b) In any case in which more than the correct amount of payment has been
made, there shall be no adjustment of payments to, or recovery by the United

States from, any person who is without fault if such adjustment or recovery
would defeat the purpose of this subchapter or would be against equity and
good conscience.
2

"Fault" is defined in 20 C.F.R. 404.507, which provides:

"Fault" as used in "without fault" (See 404.506 and 405.355) applies only to
the individual. Although the Administration may have been at fault in making
the overpayment, that fact does not relieve the overpaid individual or any other
individual from whom the Administration seeks to recover the overpayment
from liability for repayment if such individual is not without fault. In
determining whether an individual is at fault, the Administration will consider
all pertinent circumstances, including his age, intelligence, education, and
physical and mental condition. What constitutes fault (except for "deduction
overpayments" see 404.510) on the part of the overpaid individual or on the
part of any other individual from whom the Administration seeks to recover the
overpayment depends upon whether the facts show that the incorrect payment
to the individual or to a provider of services or other person, or an incorrect
payment made under section 1814(e) of the Act (42 U.S.C. 1395f(e)), resulted
from:
(a) An incorrect statement made by the individual which he knew or should
have known to be incorrect; or
(b) Failure to furnish information which he knew or should have known to be
material; or
(c) With respect to the overpaid individual only, acceptance of a payment which
he either knew or could have been expected to know was incorrect.

The phrase "defeat the purpose" of Title II is defined in 20 C.F.R. 404.508,

which provides:
(a) General. "Defeat the purpose of title II (42 U.S.C. 401 Et seq.)," for
purposes of this subpart, means defeat the purpose of benefits under this title, i.
e., to deprive a person of income required for ordinary and necessary living
expenses. This depends upon whether the person has an income or financial
resources sufficient for more than ordinary and necessary needs, or is
dependent upon all of his current benefits for such needs. An individual's
ordinary and necessary expenses include:
(1) Fixed living expenses, such as food and clothing, rent, mortgage payments,
utilities, maintenance, insurance (e. g., life, accident, and health insurance
including premiums for supplementary medical insurance benefits under title

XVIII (42 U.S.C. 1395 Et seq.)), taxes, installment payments, etc.;

(2) Medical, hospitalization, and other similar expenses;
(3) Expenses for the support of others for whom the individual is legally
responsible; and
(4) Other miscellaneous expenses which may reasonably be considered as part
of the individual's standard of living.
(b) When adjustment or recovery will defeat the purpose of title II. Adjustment
or recovery will defeat the purposes of title II (42 U.S.C.A., 401 et seq.) in
(but is not limited to) situations where the person from whom recovery is
sought needs substantially all of his current income (including social security
monthly benefits) to meet current ordinary and necessary living expenses."
4

"Against equity and good conscience" is defined in 20 C.F.R. 404.509, which

provides:
"Against equity and good conscience" means that adjustment or recovery of an
incorrect payment (under title II or title XVIII (42 U.S.C. 401 Et seq. or
1395 Et seq.)) will be considered inequitable if an individual, because of a
notice that such payment would be made or by reason of the incorrect payment,
relinquished a valuable right (examples (1), (2), and (5)) or changed his
position for the worse (examples (3), and (4)). In reaching such a
determination, the individual's financial circumstances are irrelevant.

The Act has since been amended to provide for a five-month waiting period. 42
U.S.C. 423(c)(2) (Supp. V 1975)

28 U.S.C. 1361 (1970):

The district courts shall have original jurisdiction of any action in the nature of
mandamus to compel an officer or employee of the United States or any agency
thereof to perform a duty owed to the plaintiff.

42 U.S.C. 405(g) (1970), which provides, in part:

Any individual, after any final decision of the Secretary made after a hearing to
which he was a party, irrespective of the amount in controversy, may obtain a
review of such decision by a civil action commenced within sixty days after the
mailing to him of notice of such decision or within such further time as the
Secretary may allow. . . .

Id. 405(h):
The findings and decisions of the Secretary after a hearing shall be binding
upon all individuals who were parties to such hearing. No findings of fact or
decision of the Secretary shall be reviewed by any person, tribunal, or
governmental agency except as herein provided. No action against the United
States, the Secretary, or any officer or employee thereof shall be brought under
section 41 of Title 28 to recover on any claim arising under this subchapter.

Appellant has argued that we should assume mandamus jurisdiction because of

uncertainties about the availability of injunctive relief under section 205(g), 42
U.S.C. 405(g) (1970). The Secretary has not contended that injunctive relief
is unavailable under that section
While Congress has the power to limit the equitable powers of the federal
courts, such a limitation will not be found in the absence of a clear legislative
statement. Porter v. Warner Holding Co., 328 U.S. 395, 398, 66 S.Ct. 1086, 90
L.Ed. 1332 (1946); Hecht Co. v. Bowles, 321 U.S. 321, 330, 64 S.Ct. 587, 88
L.Ed. 754 (1944). Since there is no language in Section 205 clearly indicating
this congressional intent, we conclude that a district court has the power to
enter an injunctive decree under that section. In re Letourneau, 559 F.2d 892,
894 (2d Cir. 1977); Johnson v. Mathews, 539 F.2d 1111, 1125 (8th Cir. 1976).

10

Although we do not know precisely how long the average claimant must wait
for a hearing on a request for reconsideration or "waiver," administrative delays
appear to be comparable to the "torpidity" considered by the Eldridge Court,
424 U.S. at 342, 96 S.Ct. 893. The length of deprivation of benefits is entitled
to some weight in evaluating the plaintiff's interest in a pre-recoupment
hearing. See Fusari v. Steinberg, 419 U.S. 379, 389, 95 S.Ct. 533, 42 L.Ed.2d
521 (1975)

11

The Eldridge Court also viewed evidence of reversal rates as relevant to

evaluation of the utility of a prior hearing. In that case, appealed
reconsiderations were reversed at a rate of 58%. Since several decisions of the
Secretary were reversed prior to this hearing stage, however, the court looked to
the "overall reversal rate," i. e. the number of reversals after hearing in relation
to all denials of benefits. This overall rate was 3.3%. 424 U.S. at 346 & n. 29,
96 S.Ct. 893. See also Fusari v. Steinberg, 419 U.S. 379, 383 n. 6, 95 S.Ct. 533,
42 L.Ed.2d 521 (1975)
According to information submitted to this Court, the reversal rates for
recoupment decisions are similar to those in Eldridge. In 1970, approximately
1,250,000 overpayments were discovered. From these recoupment
determinations, 1,600 recipients requested a hearing. Hearings resulted in 560

reversals. The reversal rate in the hearing was therefore 35%, and the "overall
reversal rate" less than 1%. See Elliott v. Weinberger, 371 F.Supp. 960, 966-67
(D.Haw.1974), Aff,d 44 U.S.L.W 2175 (9th Cir. Oct. 1, 1975), Vacated and
remanded, 425 U.S. 987, 96 S.Ct. 2197, 48 L.Ed.2d 813 (1976), On remand,
564 F.2d 1219 (9th Cir. 1977), Petition for cert. filed, 46 U.S.L.W. 3680 (U.S.
April 21, 1978). The Secretary has advised the court that the Social Security
Administration no longer keeps specific figures for overpayment appeals.
However, the Secretary indicated his belief that these percentages have not
substantially changed.
One of the elements in this appeal is the right to a hearing on claims for
"waiver," under 42 U.S.C. 402(b) (1970). In order to implement the decision
in Buffington v. Weinberger, Civ.No. 734-73C2 (W.D.Wash. Oct. 22, 1974),
Aff'd sub nom. Elliott v. Weinberger, 44 U.S.L.W. 2175 (9th Cir. Oct. 1, 1975),
Vacated & remanded, 425 U.S. 987, 96 S.Ct. 2197, 48 L.Ed.2d 813 (1976), On
remand, 564 F.2d 1219 (9th Cir. 1977), Petition for cert. filed, 46 U.S.L.W.
3680 (U.S. April 21, 1978), the Secretary instituted a system of informal
hearings ("personal conferences") before denying "waiver" requests. The order
applied to a nationwide plaintiff class, excepting those residing in the District
of Hawaii and the Eastern District of Pennsylvania (where other similar suits
were pending). In 1977, 42,880 waiver requests were considered, of which
19,535 were granted in the first instance. Of those denied, 1,212 resulted in a
personal conference. After a conference, 350 decisions were reversed. Thus, the
reversal rate after the pre-recoupment hearing was 29%, while the overall rate
of increase of waivers granted was less than 2%.
While this data is relevant to our inquiry, we would echo the Eldridge Court's
warning against reliance on "bare statistics," 424 U.S. at 346-47, 96 S.Ct. 893,
and do not find this information controlling in this case.
12

Under a district court order, the Secretary has had some experience with
providing an informal hearing prior to a decision denying a request that
recoupment be "waived." See note 11 Supra. In 1977, 42,880 "waiver" requests
were filed, of which 23,345 were denied in the first instance. Of those denials,
only 1,212 persons availed themselves of the right to a "personal conference"
before their benefits were reduced. These figures do not show a great increase
in the requests for hearings in comparison to the statistics for 1970, when 1,600
requests were made for a post-recoupment hearing for both waiver and
reconsideration cases. While the 1977 figures are of course not necessarily
predictive of future requests for hearings, the Secretary has not argued that this
number is expected to rise. See also Elliott v. Weinberger, supra, 564 F.2d at
1235